Tuesday, July 11, 2017

WTI Clawing Its Way Back -- July 11, 2017

Active rigs:

Active Rigs572973190185

RBN Energy: existing and planned gas pipelines out of the Permian, part 2.
Production of associated natural gas in the Permian’s Midland and Delaware basins is forecasted to continue rising through the early 2020s, challenging existing pipeline takeaway capacity out of the region. There also are limits to how much gas can flow northeast into the Midcontinent and the Upper Midwest — after all, those regions have access to gas from other areas too, including the Rockies, western Canada, the Marcellus/Utica and the Midcon itself. The same holds true for Texas’s Gulf Coast, which has emerged as another battleground for gas producers. Today we continue our series on the ability of existing pipes out of the Permian to move natural gas to market and the enhancements that will be needed to allow Permian production to keep growing.
In Part 1 of our series, we said that the pace of Permian production growth will be influenced by many factors, including the degree to which the market price for crude oil exceeds the play’s breakeven prices and the ability of midstream companies to add incremental pipeline takeaway capacity as that capacity is needed. While the pursuit of crude oil is driving drilling and production activity in the Permian, rapid growth in crude output is being accompanied by large volumes of associated gas and natural gas liquids (NGLs) that also must be dealt with.
Fortunately, the Permian has been a major production area for decades — a lot of crude, gas and NGL pipeline infrastructure is already in place. But, as we’ll get to, it won’t be enough. Part 1 built on our It Was Good Living With You, (W)aha series, which described the hub-and-spoke pipeline networks in West Texas that play critical roles in transporting large volumes of Permian gas to customers as far away as Southern California and Minnesota.


  1. The gas takeaway problem could end up being a major bottleneck.

    Texas Railroad Commission Statewide Rule 32 allows natural gas to be flared for a period not to exceed 10 producing days after initial completion, recompletion in another field, or workover in the same field.

    Exceptions (aka "flare permits") are available under some circumstances. Exceptions are good for 45 days up to a total of 180 days.

    Exceptions for more than 180 days may only be granted only through a final order (hearing) signed by the Commission.


    1. Yes, we went through this in the Bakken, during the boom.

  2. Florida chooses natural gas.....

    --- Gas pipelines critical to get gas to Florida – state added 3.4 GW of gas-fired power since 2016, another 3.9 GW coming in next 6 years ---


    1. Tons of ink are spilled on all the solar projects coming on line -- which represent a minuscule amount of energy -- and yet, it is natural gas that is the big story. This, again, speaks volumes about the importance of natural gas. Everyone can "feel good" with solar energy and wind energy stories, but if they want to "feel good" with air conditioned homes, heated homes, and electric-lit homes, they will need natural gas. Or coal.